Internal audit in Saudi Arabia has moved from a support function to a strategic necessity. As the Kingdom accelerates its governance reforms under Vision 2030, organizations are being held to higher standards of accountability, transparency, and performance.
Today, internal audit is no longer expected to simply review controls. Instead, it is expected to provide assurance to boards, anticipate risks, and highlight gaps before they affect business outcomes. This shift reflects a broader transformation in Saudi Arabia’s governance landscape.
Saudi Arabia is raising the bar for corporate governance and internal audit is now at the center of this transformation. With recent updates by the Capital Market Authority (CMA) and stronger oversight expectations across listed, pre-IPO, and fast-growing companies, many organizations are asking the same question:
“Are our internal audit and internal control systems strong enough to meet Saudi Arabia’s updated governance standards?”
For many companies, the honest answer is: not yet.
This guide breaks down the essential internal audit requirements in Saudi Arabia, what the CMA now expects, and how organizations can strengthen their governance and audit readiness quickly and effectively.
Why Internal Audit Has Become Critical Under Saudi Arabia’s New Governance Landscape
Saudi Arabia’s Vision 2030 emphasizes transparency, accountability, and investor confidence. To achieve this, the CMA has tightened expectations around internal control, risk management, and audit effectiveness.
Companies in Saudi Arabia are now expected to demonstrate:
✔ Strong internal control systems
✔ An independent internal audit function
✔ Clear reporting lines to the board or audit committee
✔ Documented risk-based audit planning
✔ Effective follow-up on audit findings
These are not optional, they are now fundamental for operational maturity, investment readiness, and regulatory compliance.
The Evolving Role of Internal Audit in Saudi Arabia
The CMA updates and the broader Vision 2030 transformation require companies in Saudi Arabia to implement the following:
1. Establish an Independent Internal Audit Function
Internal audit must be independent from operations and must report directly to the audit committee — not to finance, not to operations.
This ensures:
- Unbiased evaluations
- Better oversight
- Stronger governance alignment
2. Implement a Risk-Based Audit Plan
Saudi regulators expect companies to shift from checklist-based audits to risk-based audits that evaluate what truly affects performance, compliance, and business continuity.
A compliant internal audit plan must include:
- A risk assessment
- Prioritized audit universe
- Annual audit plan
- Audit resource planning
- Reporting timelines
3. Document Internal Controls and Test Them Regularly
This includes documenting:
- Process flows
- Risks and mitigations
- Control descriptions
- Control owners
- Control testing frequency
Many Saudi companies still struggle here, not because they lack controls, but because they lack documentation and evidence
4. Strengthen Board and Audit Committee Oversight
The CMA expects audit committees to:
- Approve the audit plan
- Oversee audit execution
- Evaluate internal audit performance
- Ensure follow-up on findings
Boards are also expected to ensure the internal audit function has adequate independence and resources.
5. Follow Up on Audit Findings
Audit findings must be:
- Tracked
- Prioritized
- Assigned to owners
- Closed with supporting evidence
Companies that fail to provide evidence of closure risk non-compliance.
Why Internal Audit in Saudi Arabia Is Central to Governance Reform
Working with companies in Saudi Arabia (especially pre-IPO and fast-growth organizations), we consistently observe:
Gap 1 — Internal audit exists “on paper,” not in practice
Companies have charters, committees, policies — but little actual oversight.
Gap 2 — No risk-based audit methodology
Internal audits are still checklist-driven instead of objective-driven.
Gap 3 — Weak documentation of controls
Many controls exist, but nothing is formalized, tested, or evidenced.
Gap 4 — Follow-up is slow or incomplete
Findings sit open for months because there is no structured process.
Gap 5 — Lack of integration with governance, risk, and strategy
Internal audit is isolated, not connected to performance or decision-making.
These gaps weaken governance maturity and expose companies to regulatory, financial, and reputational risks.
How Companies in Saudi Arabia Can Become Audit-Ready (Practical Steps)
Here’s what we recommend to leaders preparing for compliance, growth, and investor scrutiny:
Step 1 — Conduct a Governance & Audit Readiness Assessment
This identifies gaps in:
- Internal controls
- Documentation
- Audit methodology
- Committee oversight
- Risk assessment
- Audit reporting
It is the fastest way to know where you stand.
Step 2 — Build or Strengthen the Internal Audit Function
This may include:
- Creating the audit charter
- Establishing reporting lines
- Recruiting or outsourcing internal audit
- Implementing digital audit tools (Abilite etc)
- Defining an annual audit plan
Step 3 — Document and Test Internal Controls
Especially for:
- Finance
- Procurement
- Operations
- HR
- IT
- ESG/Sustainability metrics
This creates the foundation for governance compliance.
Step 4 — Train Management on Ownership and Accountability
Governance fails when there is no accountability culture.
Saudi companies preparing for IPOs or expansion must build ownership at all levels.
This ensures you’re ready for:
- CMA compliance
- Investor due diligence
- Bank financing
- IPO readiness
- Growth stages
Internal Audit Isn’t Optional Anymore, It’s a Growth Requirement
Saudi Arabia’s governance landscape is evolving fast. Companies that strengthen their internal audit and control systems today will:
✔ Earn investor trust
✔ Strengthen compliance
✔ Prepare for IPOs
✔ Reduce operational risks
✔ Improve decision-making
Those who delay will face regulatory pressure, financial risks, and lost opportunities.
If you want your organization to build a strong, compliant internal audit function aligned with Saudi Arabia’s governance expectations, Hyphen Consultancy can help.
Explore more at Hyphen Al Arabia.
